Moat Ratings Upgrades for Arrow Electronics and Avnet

Arrow Electronics and Avnet are two of the world's largest value-added distributors of electronic components including semiconductors, capacitors, interconnect products, and in Arrow's case, a provider of enterprise computing solutions. We believe both firms will maintain their places at the top of the distributor pile due to significant cost advantages over broadline distributors who may attempt to add their own value-added services and suppliers who may consider bringing such services in house. We believe this warrants an upgrade to a narrow moat rating for both firms.

Both companies have focused on improving their value-added services, such as component testing, design-chain support, supply-chain management, and other engineering-intensive offerings. However, the two firms have invested in maintaining their moats in different ways.